Equity 2

Question 1

BEPS

Answer 1

(NI - applicable preferred dividends)/ Weighted number of CS outstanding

Question 2

EPS算出の際に考慮すべき事項

Answer 2

1) Preferred stock - non cumulative - Declaration が行われた場合控除

2) 　Cumulative - 必ず控除

Question 3

BEPS　
例)　2001年Common Stock outstanding 10,000株。7月1日にCommon Stockに10,000株を新たに発行。
Treasury stock とStock dividends/ stock splitは？

Answer 3

10000株＋10，000/2=15,000
treasury stock は含めない
stock split/ stock dividends は期首に行われたものとして計算。

Question 4

Diluted EPS

希薄化させる可能性のある有価証券2つ

Answer 4

１)　warrants 及びストックオプション

2)　Convertible bonds 及びconvertible preferred stock

Question 5

warrants及びstock optionsは自己株式を適用。
1)期首にオプションが行使と仮定
２）proceedsを使用して、自己株式を取得。
年初outstanding cs 300,000 行使価格$1540,000株購入のオプションが未行使。当期中の平均株価は$20．

Answer 5

1)オプションが行使されたと仮定　40,000株15ｘ40,000
2)入金額を用いて自己株式として取得できる株数
　　　$600,000　/$20＝30,000株
流通株式の増加数　10,000株

全部で310,000株

Question 6

Diluted EPS

if converted methodの方法

Answer 6

(NI + interest on bond x (1- tax%)/ ($10,000 +転換後の株数）

Question 7

P140 Long lived Assets

有形固定資産購入後のexpenditureに関して、資産計上が行われる条件2つ

Answer 7

１）　expenditureにより有形固定資産の効率向上　improves efficiency

2) 有形固定資産の耐用年数延長　extends useful life

Question 8

P142
Long lived assets
Interest cost の資産化（capitalized)が適格な資産としての条件２つ

Answer 8

1) 資産が自社使用のために建設作製される資産

2) assets for sale or lease which are constructed as discrete projects ships, real estate but not inventory

Question 9

P142 Long lived assets

interest costs capitalizationの目的２つ

Answer 9

1) 資産に対する投資総額を取得原価によりよく反映

2) 　資産が使用される期間の収益に対して関連する費用をより適切に対応させるため。

Question 10

Ｐ１７４　
IFRS ＩＡＳ２３　
適格資産qualifying assets とは？

Answer 10

a qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. 適格資産とは意図された使用または販売が可能となるまでに相当の期間を必要とする資産をいう。

Question 11

MC144 F39
Clay company started construction of a new office building on January 1, 2001 and moved into the finished on July 1 2002. Of the building`s $2500,000 total cost, $2000,0000 was incurred in 2001, and the total amount of interest incurred by clay during 2001 was $102,000. What amount should Clay report as capitalized interest at December 31, 2001.

Answer 11

資産計上される利子はavoidable interest と実際の発生利子」の少ない方。avoidable interest は支出累計を加重平均した額に利子率を乗じて求める。＄2000,000が平均的に支出されたので、$2,000,000 x12% x1/2= 120,000。
つまり$102,000．

Question 12

MC147 F40
On March 31 2001, in an exchange with commercial substance, able company exchanged its used delivery trucks with a carrying amount of $42000 and cash $17000 for a parcel of vacant land. The fair value should able recognize on this exchange?

Answer 12

交換取引に商業実体がある場合は、基本ルール通りに会計処理を行う。Able 社は取得した土地を時価$66000引き渡されたトラックの公正価値$49000＋支払った現金$17000）で計上する。仕訳は以下の通り。
Dr.) Land  66,000
    Cr.) Trucks  42000
           Cash     17,000
          Gain         7,000

Question 13

P146
On March 31, 20x1, Davis company exchanged its trucks with carrying amount of $135,000 and $10,000 cash for Carlos companys Trucks. The fair value of Davis Companys trucks was $170,000. The cash flows from the trucks received are not expected to be significantly different than the cash flows from the trucks provided. On March 31, 20x1 what amount of gain should Davis recognize on this exchange?

Answer 13

引き渡された資産の将来のキャッシュフローが受け取った資産の将来キャッシュフローと異なると予想されない場合、交換取引は商業的実態がないものとされる。
Dr.) Truck new 145,000
Cr.) Trucks Old 　135,000
Cash 10,000

commercial substanceの交換の場合は、リスクと便益は移転されてないと考えられ、利得の認識は認められない。

Question 14

P147
交換取引において部分的にＧａｉｎを認識するケース
Bootを受領する場合

Answer 14

認識される利得
＝　基本ルールで計算されたＧａｉｎ
　　　ｘ　受領した現金÷（受領した資産のＦＶ＋現金）

Question 15

p147

Z社は原価126,000時価150,000の棚卸資産の販売促進のために、他社の同じ事象の棚卸資産として交換した。受領した棚卸資産の時価が120000であったため、交換差金bootとして現金$30000を受領した。

Answer 15

基本ルール通りの仕訳
Dr.) Inventory New  120,000 (FV)
       \cash       30,000 Boot
    Cr.)  Inventory Old   126,000
           Gain 24,000

認識される利得＝24,000 x (30,000/(120,000 + 30,000))
正しい仕訳は
Dr.) Inventory new 108,000 (120,000- 19200 (24000-4800))
Cash 30,000
Cr.) Inventory old 126,000
Gain 4800

Question 16

MC 153
Amble inc. exchanged a truck with a carrying amount of $12,000 and a fair value of $20,000 for a truck and $5,000 cash. The fair value of received are not expected to be significantly different than the cash flows from the trucks provided. At what amount should Amble record the truck received in the exchange?

Answer 16

商業的実態のない交換取引では例外的に利得を部分的に認識する。

Dr.) Truck new 15,000 -> 9000
cash 5000
Cr.) Truck old 12,000
Gain on Sales 8000 -> 2000 = 8000 x (5000x (15000+ 5000)

Question 17

MC157
A manufacturing firm purchased used equipment for 135000. The original owners estimated that the residual value of the equipment was $10,000. The carrying amount of the equipment was $120,000 when ownership transferred. The new owners estimate that the expected remaining useful life of the equipment was 10 years, with a salvage value of 15,000. what amount represents the depreciable base used by the new owners?

Answer 17

譲渡後の有形固定資産における減価償却可能価格depreciable cost を求める問題。ある製造会社(新所有者）について見ていくと、新所有者は中古設備を旧所有者から$135000で購入し、残存価格を15000とした。これより新所有者の減価償却可能な基礎価格は$120,000(135000－15000）となる。つまり$120000を新所有者が見積った耐用年数10年で償却していくことになる。したがって答えは120,000

Question 18

What is the recognition of impairment?

Answer 18

1) 有形固定資産によって将来えられるキャッシュフローの純額からキャッシュフローの増加を生むために必要な減少を差し引いた金額）の割引き前　undiscounted net cash flowと2)　carrying valueを比較し、１）が２を下回った場合は減損が生じたとする。

Question 19

Fair value test 
1) 市場価値が入手可能なとき⇒○○
2)　市場価値が入手不可能　ＰＶ法　
　　　　　ＰＶ法１）　○○PV - best estimated 一本を割引く
                     2)    expected pv　○○平均した期待値を割引く

Answer 19

1) 市場価値が入手可能なとき⇒ＦＶ
2)　市場価値が入手不可能　ＰＶ法　
　　　　　ＰＶ法１）　traditional PV - best estimated 一本を割引く
2) expected pv　加重平均した期待値を割引く

Question 20

売却処分予定の資産のimpairment test

損失計上とは？

Answer 20

ＦＶ　（売却コスト控除後ＮＲＶ）をＡ，ＢＶをＢ　Ａ＜Ｂのとき

Question 21

減損後
１）翌期以降は減価償却されない
２）処分予定を決定した直前の○○を超えないことを条件

Answer 21

１）翌期以降は減価償却されない

２）処分予定を決定した直前のＢＶを超えないことを条件

Question 22

Zach Corp. pays commissions to its sales staff at the rate of 3% of net sales.
Sales staff are not paid salaries but are given monthly advances of $15,000. Advances are charged to commission expense, and reconciliations against commissions are prepared quarterly. Net sales for the year ended March 31, 2002, were $15,000,000. The unadjusted balance in the commissions expense account on March 31, 2002, was $400,000. March advances were paid on April 3, 2002.

In its Income Statement for the year ended March 31, 2002, what amount should Zach report as commission expense?

A. 	$465,000
B. 	$450,000
C. 	$415,000
D. 	$400,000

Answer 22

C
Incorrect…

This is the unadjusted expense balance at year end plus one month’s expense. This amount does not reflect the entire year’s expense.

BCorrect!

Commission expense is 3% of sales or $450,000 (.03 x $15,000,000). The information about advances is irrelevant because it pertains to how commissions are paid, not recognized.

Question 23

An analysis of Thrift Corp.’s unadjusted prepaid expense account at December 31, 2004, revealed the following:

Thrift had an opening balance of $1,500 for its comprehensive insurance policy. Thrift had paid an annual premium of $3,000 on July 1, 2003.

A $3,200 annual insurance premium payment made July 1, 2004 was unadjusted.

A $2,000 advance rental payment for a warehouse Thrift leased for one year beginning January 1, 2005 was included.

In its December 31, 2004, Balance Sheet, what amount should Thrift report as prepaid expenses?

A. 	$5,200
B. 	$3,600
C. 	$2,000
D. 	$1,600

Answer 23

B
Correct!

Opening balance
$1,500
less the amortization of remaining balance. The $3,000 payment on July 1, 2003 covers the period July 1, 2003 - June 30, 2004. Thus by the end of 2004, the prepayment has expired.
(1,500)
Plus the annual payment made July 1, 2004
3,200
Less 1/2 year’s amortization to December 31, 2004
(1,600)
Plus warehouse prepayment (no amortization is required for this payment because the lease term begins Jan. 1, 2005)
2,000
Equals ending 2004 prepaid expenses (prepaid asset)
3,600

A Incorrect…

This answer includes all of the $3,200 insurance policy renewal, yet by the end of 2004 one-half of that amount has expired.

C Incorrect…

This amount fails to include the one-half year remaining on the insurance policy renewal of July 1, 2004.

D Incorrect…

This amount fails to include the warehouse prepayment, the full amount of which is included in prepayments at the end of 2004 because the lease term does not begin until 2005.

Question 24

Ina Co. had the following beginning and ending balances in its prepaid expense and accrued liabilities accounts for the current year:
Prepaid expenses Accrued liabilities
Beginning balance $ 5,000 $ 8,000
Ending balance 10,000 20,000
Debits to operating expenses totaled $100,000. What amount did Ina pay for operating expenses during the current year?

A.  $ 83,000

B.  $ 93,000

C.  $107,000
D.  $117,000

Answer 24

B
correct
An increase in prepaid expenses indicates that more cash was paid than expensed (5,000). An increase in accrued liabilities indicates that more expense was accrued than paid (12,000). The reconciliation of operating expense to cash paid is: 100,000 + 5,000 - 12,000 = 93,000.

A
incorrect
An increase in prepaid expenses indicates that more cash was paid than expensed (5,000). An increase in accrued liabilities indicates that more expense was accrued than paid (12,000). The reconciliation of operating expense to cash paid is: 100,000 + 5,000 - 12,000 = 93,000.

Question 25

Pak Co.’s professional fees expense account had a balance of $82,000 on December 31, 2001, before considering year-end adjustments relating to the following:
Consultants were hired for a special project at a total fee not to exceed $65,000. Pak has recorded $55,000 of this fee based on billings for work performed in 2001.
The attorney’s letter requested by the auditors dated January 28, 2002, indicated that legal fees of $6,000 were billed on January 15, 2002, for work performed in November 2001, and unbilled fees for December 2001 were $7000.
What amount should Pak report for professional fees expense for the year ended December 31, 2001?

A.  $105,000

B.  $95,000

C.  $88,000
D.  $82,000

Answer 25

B
Correct
The two amounts listed in the attorney’s letter should be added to the preadjusted amount of expense, but the appropriate amount of the consultant expense has been included in the preadjusted amount. The ending expense balance therefore is $95,000 ($82,000 + $6,000 + $7,000).

A
Incorrect
This amount includes the $10,000 of consulting fees not yet earned. The expense amount of $82,000 already includes the $55,000 amount for the work performed in 2001.

Question 26

On November 1, 2005, Key Co. paid $3,600 to renew its insurance policy for three years. At December 31, 2005, Key’s unadjusted trial balance showed a balance of $90 for prepaid insurance and $4,410 for insurance expense.
What amounts should be reported for prepaid insurance and insurance expense in Key’s December 31, 2005, financial statements?

Prepaid Insurance Insurance expense
$3,300 $1,200
$3,400 $1,200
$3,400 $1,100

 $3,490 	 $1,010  Question #11 (AICPA.910556FAR-P1-FA)

Answer 26

C
Correct
Prepaid insurance at year end is $3,400, which is the portion of the prepayment on November 1 that continues to the next three years. Of the 36 months of coverage purchased, 34 months remain at December 31: $3,400 = (34/36)($3,600). Insurance expense includes three items: (1) the $90 of prepaid insurance remaining in the trial balance that has expired, (2) the $200 of insurance expense related to the November 1 purchase above ($3,600-$3,400 remaining prepaid), and (3) the expense portion of the $4,410 insurance expense amount in the unadjusted trial balance ($4,410-$3,600) = $810. This firm must have expensed the entire $3,600 November 1 purchase because it was not reflected in prepaid insurance. The difference of $810 reflects actual expense. Therefore, total insurance expense equals $1,100 = $90 + $200 + $810.

Question 27

Based on 2000 sales of compact discs recorded by an artist under a contract with Bain Co., the artist earned $100,000 after an adjustment of $8,000 for anticipated returns.
In addition, Bain paid the artist $75,000 in 2000 as a reasonable estimate of the amount recoverable from future royalties to be earned by the artist.
What amount should Bain report in its 2000 Income Statement for royalty expense?

A.  $100,000
B.  $108,000
C.  $175,000
D.  $183,000

Answer 27

A
Correct
The net amount earned by the artist is also the royalty expense to the firm. Royalty expense is recognized on the basis of the sales of the CD. Adjustments to the final amount earned for 2000, after all return information is known, will be treated as an adjustment to royalty expense in 2001. New information in 2001 will require a change in estimate, not retroactive application. The $100,000 amount is the best estimate of the royalty cost to Bain in 2000 that will ultimately be paid on 2000 sales.

C
Incorrect
This double counts the expense for 2000 in the amount of the $75,000 payment. The artist earned $100,000, based on the sales of the CD. That is the total expense for Bain to recognize. The royalty payment of $75,000 is a partial payment of those earnings.

Question 28

Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the net increase during the accounting period of the
accounts receivable and accrued expenses payable
No No
No Yes
Yes No
Yes Yes

Answer 28

A
Incorrect
The second part of the answer is incorrect. An increase in accounts receivable reflects recognized but uncollected sales. The accrual method recognizes these sales as earnings, causing income to exceed cash-basis income for such sales. Thus, cash-basis income is understated relative to accrual-basis accounting. The opposite is true for an increase in accrued expenses. The increase in the liability reflects recognized but unpaid expenses. The accrual method recognizes these expenses in earnings, causing income to decrease relative to cash-basis income. Thus, cash-basis income is overstated, relative to accrual-basis accounting.

B
correct
An increase in accounts receivable reflects recognized but uncollected sales. The accrual method recognizes these sales as earnings, causing income to exceed cash-basis income for such sales. Thus cash-basis income is understated relative to accrual-basis accounting. The opposite is true for an increase in accrued expenses. The increase in the liability reflects recognized but unpaid expenses. The accrual method recognizes these expenses in earnings, causing income to decrease relative to cash-basis income. Thus, cash-basis income is overstated, relative to accrual-basis accounting.

Question 29

Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the net increase during the accounting period of the
accounts receivable and accrued expenses payable
No No
No Yes
Yes No
Yes Yes

Answer 29

A
Incorrect
The second part of the answer is incorrect. An increase in accounts receivable reflects recognized but uncollected sales. The accrual method recognizes these sales as earnings, causing income to exceed cash-basis income for such sales. Thus, cash-basis income is understated relative to accrual-basis accounting. The opposite is true for an increase in accrued expenses. The increase in the liability reflects recognized but unpaid expenses. The accrual method recognizes these expenses in earnings, causing income to decrease relative to cash-basis income. Thus, cash-basis income is overstated, relative to accrual-basis accounting.

B
Correct
An increase in accounts receivable reflects recognized but uncollected sales. The accrual method recognizes these sales as earnings, causing income to exceed cash-basis income for such sales. Thus cash-basis income is understated relative to accrual-basis accounting. The opposite is true for an increase in accrued expenses. The increase in the liability reflects recognized but unpaid expenses. The accrual method recognizes these expenses in earnings, causing income to decrease relative to cash-basis income. Thus, cash-basis income is overstated, relative to accrual-basis accounting.

Question 30

A company records items on the cash basis throughout the year and converts to an accrual basis for year-end reporting. Its cash-basis net income for the year is $70,000. The company has gathered the following comparative Balance Sheet information:
Beginning of year	End of year
Accounts payable	$ 3,000	$ 1,000
Unearned revenue	300	500
Wages payable	300	400
Prepaid rent	1,200	1,500
Accounts receivable	1,400	600
What amount should the company report as its accrual-based net income for the current year?

A.  $68,800
B.  $70,200
C.  $71,200

Answer 30

A
Incorrect
This response is incorrect because all of the signs for the accrual adjustments are inverted. If you got this response - you are on the right track - but you have your signs backward. For example, the adjustment to cash-basis net income for the net change in accounts payable is a positive $2,000. If you used the $2,000 as a negative adjustment to cash-basis net income you are in error. The beginning accounts payable of $3,000 is added to cash-basis net income because the AP paid in the current year is for prior year expenses. The ending AP balance of $1,000 is subtracted from cash-basis net income, because the expenses relate to the current year, even though the cash flow will occur next year. This will result in a net adjustment of $2,000 added to cash-basis net income.
C Correct
This response is incorrect because all of the signs for the accrual adjustments are inverted. If you got this response - you are on the right track - but you have your signs backward. For example, the adjustment to cash-basis net income for the net change in accounts payable is a positive $2,000. If you used the $2,000 as a negative adjustment to cash-basis net income you are in error. The beginning accounts payable of $3,000 is added to cash-basis net income because the AP paid in the current year is for prior year expenses. The ending AP balance of $1,000 is subtracted from cash-basis net income, because the expenses relate to the current year, even though the cash flow will occur next year. This will result in a net adjustment of $2,000 added to cash-basis net income.